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TEEKAY TANKERS
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TEEKAY TANKERS
May 15, 2014
First Quarter 2014 Earnings
Presentation
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TEEKAY TANKERS
Forward Looking Statements
This presentation contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as
amended) which reflect management’s current views with respect to certain future events and performance, including statements
regarding: the crude oil and refined product tanker market fundamentals, including the balance of supply and demand in the
tanker market, estimated growth in the world tanker fleet in 2014 and 2015, estimated growth in global oil demand and crude oil
tanker demand in 2014, and tanker fleet utilization and spot tanker rates in 2014 and 2015; the Company’s financial position and
ability to take advantage of growth opportunities in an expected future tanker market recovery; the finalization by TIL of an
expected new credit facility; and the timing of Teekay Tankers’ acquisition of an ownership interest in Teekay Operations, future
growth in the number of vessels under management, and the expected future effect of such acquisition on the Company’s
financial results, including net income. The following factors are among those that could cause actual results to differ materially
from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such
statement: changes in the production of or demand for oil; changes in trading patterns significantly affecting overall vessel
tonnage requirements; greater or less than anticipated levels of tanker newbuilding orders and deliveries or greater or less than
anticipated rates of tanker scrapping; changes in applicable industry laws and regulations and the timing of implementation of
new laws and regulations; the potential for early termination of short- or medium-term contracts and inability of the Company to
renew or replace short- or medium-term contracts; changes in interest rates and the financial markets; delays in the completion, if
any, of the Company’s acquisition of an ownership interest in Teekay Operations; increases in the Company's expenses,
including any dry docking expenses and associated off-hire days; failure of Teekay Tankers Board of Directors and its Conflicts
Committee to accept future acquisitions of vessels that may be offered by Teekay Corporation or third parties; and other factors
discussed in Teekay Tankers’ filings from time to time with the United States Securities and Exchange Commission, including its
Report on Form 20-F for the fiscal year ended December 31, 2013. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change
in the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any such
statement is based.
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TEEKAY TANKERS
Recent Highlights
• Q1-14 Results
– Reported adjusted net income of $0.20 per share, compared to a net loss of $0.04 per share in Q1-13
– Generated Cash Available for Distribution (CAD)(1) of $0.36 per share, compared to $0.10 per share in Q1-13
– Declared quarterly fixed dividend of $0.03 per share
• In the first quarter of 2014, TNK recognized the highest spot tanker earnings in its Suezmax and Aframax segments since 2010
• In March 2014, TNK took over ownership of the two VLCCs securing its investment in term loans and, in May 2014, TNK sold the vessels for a combined purchase price of $154 million to Tanker Investments Ltd. (TIL)
• In April 2014, TNK agreed to acquire a 50% joint-venture interest in Teekay Corporation’s commercial and technical management operations for approximately $15.6 million
• In January 2014, TNK invested $25 million in Tanker Investments Ltd. (TIL) which completed its initial public offering on the Oslo Stock Exchange in late-March
(1) Cash Available for Distribution represents net income (loss), plus depreciation and amortization, unrealized losses from derivatives, non-cash Items
and any write-downs or other non-recurring items, less unrealized gains from derivatives. Please refer to the Teekay Tankers Q1-14 Earnings Release
for reconciliation to most directly comparable GAAP financial measure.
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Profitable Monetization of Term Loan Investment
• In late-March 2014, TNK exercised its rights under the
security documents and assumed full ownership of two
VLCC vessels, which previously secured its $115 million
investment in term loans
• In early-May 2014, TNK sold the vessels to Tanker
Investments Ltd (TIL) for their fair market value of $154
million
• Based on interest income received, all expenses
incurred, and the sale price of the vessels, TNK earned
a total rate of return of 12% p.a. on this investment
since inception (July 2010)
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• In Q2-14, TNK agreed to acquire a 50% joint venture interest in Teekay Corporation’s
commercial and technical management operations (Teekay Operations) for $15.6
million
• TNK will pay Teekay in equity at a price of $3.70 per share
• The transaction will result in ownership in a new TNK-Teekay joint venture which will
include ownership of:
– Commercial Management Operations, including the Gemini Suezmax Pool (33% owned by
Teekay), Aframax RSA, and Taurus LR2 Pool
• Currently Teekay commercially manages 89 vessels
– Teekay Marine Limited (51% owned by Teekay)
• Currently Teekay technically manages 51 vessels
• TNK expects to earn ~$2.5 million1 in additional equity income per year
• Teekay group entities and TIL have a contractual obligation to use Teekay Operations
to manage their conventional tanker vessels
Strategic Acquisition of Tanker Operations
1 -Based on the last 4 quarters adjusted for known changes to the fleet
This acquisition represents the final step in Teekay Tankers’ evolution
into a full-service conventional tanker platform
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Kareela Spirit Aframax 1999
Kyeema Spirit Aframax 1999
BM Breeze Aframax 2008
3rd Party Vessel, TBN Aframax 2008
Donegal Spirit LR2 2006
Limerick Spirit LR2 2007
Galway Spirit LR2 2007
Ganges Spirit Suezmax 2002
Yamuna Spirit Suezmax 2002
Ashkini Spirit Suezmax 2003
Iskmati Spirit Suezmax 2003
Kaveri Spirit Suezmax 2004
Narmada Spirit Suezmax 2003
Godavari Spirit Suezmax 2004
Zenith Spirit Suezmax 2009
Teesta Spirit MR 2004
Mahanadi Spirit MR 2000
Kanata Spirit Aframax 1999
Helga Spirit Aframax 2005
Pinnacle Spirit Suezmax 2008
Summit Spirit Suezmax 2008
Matterhorn Spirit Aframax 2005
Erik Spirit Aframax 2004
Hugli Spirit MR 2005
Americas Spirit Aframax 2003
Australian Spirit Aframax 2004
Esther Spirit Aframax 2004
Everest Spirit Aframax 2004
Axel Spirit Aframax 2004
Hong Kong Spirit (50%) VLCC 2013
2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
$12,000
$15,150
$18,000
$37,500 2
$15,750
$20,950
$20,950
$18,000
$19,500
$15,500
$16,500
$21,000
$21,000
$30,600 1
$14,100
Trading in
External Pools
Fleet Employment Shifting to Spot Market
Trading in
Teekay Pools
Fixed-Rate
Employment
Fixed-Rate Coverage (estimated)
12-month (Q2-14 to Q1-15) 34%
Note: Excludes TNK’s investment in TIL
1 Charter rate covers incremental Australian crewing expenses of approximately $14,000 per day above international crewing costs.
2 50% profit share if market earnings above $40,500 per day.
In-Charter
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In-Charter
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• Crude tanker rates strengthened significantly during Q1-14
– Winter weather delays + record Chinese crude imports
• Earnings came off Q1 highs towards the end of the quarter due to seasonal
refinery maintenance, end of weather delays
– Crude tanker rates in Q2-14 to date are averaging above 2013 levels y-o-y
Q1-14 Freight Market Review
0
5
10
15
20
25
30
35
40
2009 2010 2011 2012 2013 2014
‘000 U
SD
/ D
ay
Q1 Spot Tanker Rates
Aframax Suezmax
0
20
40
60
80
100
120
140
‘000
US
D /
Da
y
Mid-Sized Tanker Rates At 5-Year High in Jan’14
Aframax Suezmax
Source: Clarksons
Strong Q1-14 rates an indication of tightening fundamentals
Source: Clarksons
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Q2 / Q3 Crude Shipping Market Outlook
8
• Wild card factors that may impact the market over the next 6 months include:
– An escalation of the Russia / Ukraine conflict & associated impact on trade
– Potential upturn in OPEC production volumes (Libya, Iran)
– Further strategic stockpiling in China (2nd phase of SPR build)
• Expect a seasonally weaker crude
tanker market in Q2 and Q3 due
to scheduled refinery maintenance
• However, rates are expected to
average higher than in the same
period of 2013 due to tightening
supply / demand fundamentals 73
74
75
76
77
78
79
Jan'14 Feb'14 Mar'14 Apr'14 May'14 Jun'14 Jul'14
mb
/d
Source: IEA
Global Refinery Throughput
Q2 / Q3 tanker rates expected to average higher than in 2013
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• The Suezmax and Aframax tanker fleets are expected to decrease in size
during 2014-16 as scrapping is estimated to exceed new vessel deliveries
• Most major shipyards are full through to late 2016
-10%
-5%
0%
5%
10%
15%
-40
-30
-20
-10
0
10
20
30
40
50
60
Nu
mb
er
of
Vessels
Suezmax Fleet Growth
Scrapping Forecast Scrapped
Delivery Forecast Delivered
Net Fleet Growth (% of Fleet)
Source: Clarksons / Internal Estimates
Shrinking Mid-Size Tanker Fleet
Shrinking Mid-Size fleet paves the way for a market recovery
-10%
-5%
0%
5%
10%
15%
-80
-60
-40
-20
0
20
40
60
80
100
120
Nu
mb
er
of
Vessels
Aframax* Fleet Growth
Scrapping Forecast Scrapped
Delivery Forecast Delivered
Fleet Growth (% of Fleet)
Source: Clarksons / Internal Estimates
*Includes Coated Aframaxes
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• Improvement in rates expected from 2014 onwards due to slowing fleet
growth (sub-2% p.a.) coupled with economic recovery, improved oil demand
• Increased level of rate volatility expected as fleet utilization improves
Higher Fleet Utilization Starting in 2014
0%
1%
2%
3%
4%
5%
6%
7%
8%
76%
78%
80%
82%
84%
86%
88%
90%
92%
200
8
200
9
201
0
201
1
201
2
201
3
201
4E
201
5E
Source: Platou / Internal Estimates
Tanker Demand Growth Tanker Supply Growth Fleet Utilization
Strengthening fundamentals the basis for a sustained tanker market recovery
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Q2-14 Spot Earnings Update
• Overall, average spot bookings for Q2-14 to-date are
significantly higher than Q2-13 (based on
approximately 55% and 70% of days booked in the
quarter for Suezmax/Aframax and LR2 segments,
respectively)
o Suezmax $17,200 per day (vs. $12,150 per day in Q2-13)
o Aframax $15,800 per day (vs. $12,400 per day in Q2-13)
o LR2 $14,000 per day (vs. $12,800 per day in Q2-13)
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2014 Investor Day
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Appendix
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TNK 2014 Drydock Schedule
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Note:
(1) In the case that a vessel drydock straddles between quarters, the drydock has been allocated to the quarter in which majority of drydock days occur.
(2) Only owned vessels were accounted for in this schedule.
Teekay Tankers
Segment
Vessels
Off-hire
Total
Off-hire
Days
Vessels
Off-hire
Total
Off-hire
Days
Vessels
Off-hire
Total
Off-hire
Days
Vessels
Off-hire
Total
Off-hire
Days
Vessels
Off-hire
Total
Off-hire
Days
Spot Tanker 1 21 - - 1 23 - - 2 44
Fixed-Rate Tanker - - 3 66 - - 1 23 4 89
1 21 3 66 1 23 1 23 6 133
December 31, 2014 (E) Total 2014March 31, 2014 (A) June 30, 2014 (E) September 30, 2014 (E)
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TEEKAY TANKERS 15